Cross Border Mergers Advant.

Globalisation, the growing need to encourage cooperation between companies of different Member States and to adapt to today standards, led the EU Council to adopt Directive on Cross-Border Merger.

The European Directive on cross-border mergers adopted in 2005 aims to facilitate mergers and acquisitions activity across the European Union.

Cyprus may even extend the meaning of the Cross-Border Mergers in countries outside the EU subject to certain conditions. (This is expected to pass into law soon)

Cross-border mergers combined with the transfer of Company’s Seat (companies that re-domicile their registered office in Cyprus) may prove most favourable for restructuring purposes. (Transfer-in companies, within the scope of the Cyprus Company Law Cap. 113. Can be defined as the procedure of re-domiciling a foreign company’s registered office from a country or jurisdiction in the Republic of Cyprus and vice versa.)

Avoidance of possible publicity, delay and expense in case of a liquidation including legal proceedings. The transferor company is automatically dissolved on the merger taking effect, furthermore there is no need to undergo a separate liquidation process following a merger, and therefore costs and timescales are reduced;

Other advantages:

In case of surviving company, the old companies involved cease to exist, all their assets and liabilities are transferred to the new entity and their members become the members of the new entity.

The control of the new company falls under the Cyprus law and therefore streamlining corporate governance obligations and compliance costs;

Reduction of the number of legal entities;

Harmonised, simplified and speedy national procedure, eliminating the need for individual transfer documents under the traditional business sale, dissolution, liquidation etc;

For a large group with complex assets and liabilities, the Cyprus cross-border merger regime constitutes a more efficient way to merge the businesses of two companies rather than a traditional transfer of the individual assets and liabilities;

Expand business in more than one MemberState without the need to form a European Company;

Cyprus situated between Asia, Africa and Europe motivates new trading possibilities for companies;

Cyprus transfer-in advantages (Transfer of Company’s Seat)

Generally the existing corporate identity of the migrating company is retained;

Companies within a group registered in, non-EU countries (Zero tax countries) may transfer their registered seat in Cyprus, subject to fulfillment of certain requirements. The transfer may prove to be more beneficial especially in restructuring cases seeking to achieve greater transparency. (Expected to pass into law);

Employment contracts, contracts with suppliers and other contracts, agreements or instruments) are transferred to the surviving company;

For a large group with complex assets and liabilities, the cross-border merger regime constitutes a more efficient way to merge the businesses of two companies rather than a traditional transfer of the individual assets and liabilities;

Expand business in more than one Member State without the need to form a European Company;

Cyprus situated between Asia, Africa and Europe motivates new trading possibilities for companies;

The authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF Cyprus firms are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.